Kings saga becomes billionaires' tug of war

03/02/2013 12:00 AM

03/15/2013 11:03 AM

Each city has a wealthy basketball fanatic with a burning desire to own an NBA franchise – and the backing of an even wealthier financier who has the muscle to make it happen.

The battle for the Sacramento Kings was formally joined early Friday. Mark Mastrov and Ron Burkle submitted to NBA headquarters their proposal to buy the Kings and keep the team from moving to Seattle. In the weeks to come, they will join Mayor Kevin Johnson in presenting the league with a companion proposal to build a new arena at the site of ailing Downtown Plaza.

Still, it's far from certain that Mastrov and Burkle can pry the team from Seattle investors Chris Hansen and Steve Ballmer, who have even deeper pockets and a deal in place to purchase the Kings from the Maloof family.

It's a billionaires' tug of war over one of the lowliest franchises in pro sports, and at this point it's hard to predict who will win.

"As you try to align these two groups and look at Mastrov and Burkle and say, Gee, is that stronger than the guys in Seattle? We don't have enough information to know," said David Carter, director of the Sports Business Institute at the University of Southern California.

Adding to the mystery is that the NBA has told both groups to keep quiet. Hansen's team hasn't said a thing beyond a short news release in January announcing the deal with the Maloofs. Burkle's spokesman said the two Sacramento bidders wouldn't comment beyond a few statements issued through Mayor Kevin Johnson's office late Thursday.

What is known is that Hansen and Ballmer struck a deal that values the Kings at $525 million, according to Seattle city officials. That translates into $341 million for the 65 percent share controlled by the Maloofs.

A source familiar with Mastrov and Burkle's bid described it as extremely close to Seattle's.

Making exact comparisons is difficult because Mastrov and Burkle don't have to pay millions in relocation expenses, including the immediate repayment of a $75 million loan the Kings owe the city of Sacramento.

With the bid for the team now in the hands of the NBA, city officials Monday turned their attention back to negotiating a subsidy for a new arena. City officials expressed confidence that they could reach agreement with Burkle and Mastrov after years of frustration dealing with the Maloofs. The family encountered numerous financial setbacks in recent years and abandoned a tentative arena deal with the city last spring.

With Burkle and Mastrov, "we have a more financially secure partner to work with," said City Manager John Shirey.

The Maloofs have essentially been shunted to the sidelines for now. When the NBA board of governors meets in mid-April to decide whether to move the team to Seattle, the Maloofs will have just one vote, like every other owner.

A league source said the NBA will forward the Mastrov-Burkle proposal to the Maloofs.

"The Maloofs have a deal – it has to be vetted by NBA – but under their arrangement with Seattle, they have the right to receive backup offers," said this source, who was not authorized to speak publicly. "They can certainly look at this proposal and see what they think about it."

Other sources said Mastrov, who is taking the lead on bidding for the team, knows the Maloofs and has a good relationship with them.

'I love basketball'

Johnson's advisers think Mastrov and Burkle have the heft to persuade the NBA to reject the Seattle deal come April. Besides their wallets, they have considerable connections in the sports and political worlds.

Mastrov, who lives in the East Bay, founded the 24 Hour Fitness chain after borrowing $15,000 from his grandmother. He sold the chain for $1.7 billion in 2005 and continues to invest in the health-club industry through his New Evolution Ventures investment firm.

"I love basketball and I love the NBA," he told The Bee in January.

A self-described gym rat, he was the runner-up in the bidding for the Golden State Warriors in 2010, when his final offer of $420 million was topped by Joe Lacob and Peter Guber's $450 million.

"He is in the big, big leagues, without question," said Mastrov's longtime friend Bill Duffy, an NBA player agent. "In addition to his own wealth, his Rolodex is as impressive as anyone on a global basis – he is heavily networked."

Burkle's contact list also has plenty of star power. Over the years his friends have included Bill Clinton, rap tycoon Sean "Diddy" Combs and movie mogul Harvey Weinstein.

A former supermarket clerk, he made his fortune in the grocery business and is worth more than $3 billion. His Beverly Hills mansion, Green Acres, was once owned by silent-movie legend Harold Lloyd. He is a huge donor to the Clintons, former Gov. Gray Davis and other Democrats.

Burkle co-owns hockey's Pittsburgh Penguins and in 2007 negotiated a complicated agreement to build the team a new arena. The talks didn't always go smoothly, with Burkle at one point threatening to move the Penguins to Kansas City.

Ultimately, the team stayed put. And when it came to building the arena, Burkle was in the room negotiating the details with the likes of then-Pennsylvania Gov. Ed Rendell. "He was right there helping to lead the charge," said Chuck Greenberg, a lawyer who represented the Penguins in the talks. "He knew when the moment was right."

One of Burkle's political connections, to Sacramento lobbyist Darius Anderson, landed him in the thick of the Kings saga. The two men have known each other for 20 years, since Anderson began counseling Burkle on public policy issues.

In 2011, they teamed up on a surprise bid for the Kings. Their offer was rejected, yet it helped keep the Kings in town. The Maloofs were going to seek permission to move to Anaheim, but the NBA persuaded them to drop the idea after hearing about Burkle and Anderson's interest.

An even richer suitor

Burkle clearly commands NBA Commissioner David Stern's respect. Stern granted the financier a two-hour audience in New York in late January, a few days after the Maloofs made their deal with the Seattle group. Burkle and Stern also spoke over the phone Thursday, according to a source, who would not speak publicly because talks are ongoing.

Stern has said he doesn't like to see franchises move, and he personally negotiated the arena deal in Sacramento last spring that was ultimately abandoned by the Maloofs.

Tugging on Stern's other arm, though, the Seattle group also has plenty of pull. It has the advantage of a signed deal with the team's owners, and it has plunked down a $30 million nonrefundable deposit. Stern has said he would like the NBA to return to Seattle.

Ballmer is worth nearly $16 billion, or five times as much as Burkle. The Microsoft chief executive was part of a group of investors that tried in vain to keep the Seattle SuperSonics from moving to Oklahoma City in 2008. The group offered to buy the team and contribute $150 million toward a $300 million renovation of aging KeyArena.

Their proposal collapsed when the Washington State Legislature refused to put up the rest of the money. Stern later praised the group's "extraordinary efforts."

The team's departure crushed legions of fans – none more than Hansen. When he first went public a year ago with his dream of reviving the Sonics, he spoke wistfully of rooting the team on to its only NBA title as a young boy.

Now a successful San Francisco hedge fund manager – he was an early investor in Facebook – Hansen has built a connection with Seattle fans. He led a rally last June in a city park, dressed in a bright green Sonics jacket and shaking hands with former Sonics players.

After the city tentatively approved funding for an arena last September, he bought beers for fans at a bar.

"I still consider this home," he told the Seattle Times in a rare interview a little more than a year ago.


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